Market close: Late fall completes worst performance in 14 years

The Warehouse Group tumbled 7.14 per cent after recording a 5.5 per cent fall in quarterly sales. Photo / Jason Oxenham

Another late fall on the New Zealand sharemarket was reminiscent of the year just gone: Full of hope but failed to deliver. Thanks to inflation and rising interest rates.

The S&P/NZX 50 Index was trucking along nicely on the last day of trading for 2022, ahead by around 0.4 per cent for most of the shortened session.

But the index hit a road bump in the last 45 minutes and closed at 11,473.24, down 65.21 points or 0.57 per cent after reaching an intraday high of 11,596.33.

There were 61 gainers and 58 decliners on the main board, with 10.23 million shares worth $42.8 million changing hands.

The late fall completed the worst performance in 14 years for the NZX index – down 12 per cent compared with minus 32.8 per cent in 2008. However, over the past two years of the Covid menace the index has finished flat, down just 0.2 per cent.

Shane Solly, portfolio manager with Harbour Asset Management, said the local market certainly reversed some of enthusiasm going through it, led by Covid concerns.

“The Italians completed genomic sequencing on Chinese passengers who tested positive and found it was Omicron and no new variant, so that created some relief.”

Solly said the cold comfort is that the New Zealand market did better than others overseas. And the rock star is the Australian market, with the S&P/ASX 200 Index up about 1 per cent for the year.

“But really, we can only say ‘thanks 2022, good luck and good riddance’ and we look forward to 2023. If we continue to see the inflation numbers reducing and the central banks stepping back, then the markets will be in a better position.

“The big focus next year will be: ‘Have the central banks done enough or do they need to do more?’,’’ said Solly.

Wall Street had a strong rebound on the second to last trading day of their year, boosted by stronger-than-expected unemployment benefit claims for the week ending December 24 as the Federal Reserve aims to cool the economy.

There were 225,000 claims, up 9000 from the previous week and above analysts’ estimate of 223,000.

The Dow Jones Industrial Average was up 1.05 per cent to 33,220.8 points but down 8.58 per cent for the year; S&P 500 Index gained 1.75 per cent to 3849.28 (falling 19.24 per cent); and Nasdaq Composite rose 2.59 per cent to 10,478.09 (down 32.5 per cent). Apple rebounded 2.83 per cent to US$129.61 (NZ$204.68).

At home, The Warehouse Group surprised the market by reporting a reduction in sales after trading the day before.

“It’s not the norm to do this in capital markets these days,” Solly said.

The Warehouse Group tumbled 20c or 7.14 per cent to $2.60 after recording a 5.5 per cent decline in sales for the second quarter, October 31 to December 26, compared with the same period last year. The first quarter group sales increased 21.2 per cent.

Second quarter sales at The Warehouse stores were down 1.3 per cent, Warehouse Stationery declining 9.2 per cent, Noel Leeming decreasing 11.8 per cent, and Torpedo7 down 8.5 per cent.

The group said sales for the financial year to date increased to $1.506 billion, up from $1.414b, and gross profit margin was down about 300 basis points in the second quarter.

Solly said the sales reduction was not a total surprise but pretty disappointing nonetheless – after strong sales last year including electronics.

“The Warehouse is facing margin compression and higher operating costs, and that may well continue.”

Vista Group increased 5c or 3.4 per cent to $1.52 after telling the market it has reached agreement with Cineworld Group, in Chapter 11 bankruptcy, over payment of money owing.

Cineworld, one of the largest in the world with 750 cinema sites in 10 countries, will continue to use Vista’s software and services. Vista upgraded its revenue guidance for the 2022 financial year to $131m-$135m, from $123m-$128m.

Solly said Vista was experiencing better (payment) collections and good recurring revenue and the positive guidance, ahead of expectation, emphasised that Vista cinema management systems are mission-critical.

Among leading stocks, Fisher and Paykel Healthcare was up 22c to $22.60; Mainfreight increased 25c to $67.50; Westpac added 42c or 1.71 per cent to $24.92; Scales Corp collected 5c to $4.10; and PGG Wrightson gained 7c to $4.37.

Delegat Group picked up a further 20c to $10.20 but only on four trades worth $3562.

Auckland International Airport was down 22c or 2.74 per cent to $7.81; Freightways decreased 18c or 1.83 per cent to $9.66; Briscoe Group declined 10c or 2.13 to $4.60; and Air New Zealand shed 1c to 74.5c.

In the energy sector, Meridian was down 11c or 2.06 per cent to $5.24; Contact declined 14c to $7.71; Mercury decreased 4c to $5.56; and Genesis shed 4c to $2.58.

In the retirement sector, Ryman Healthcare lost another 7c to $5.34; Summerset Group also declined 7c to $8.85; and Oceania Healthcare was down 2c or 2.56 per cent to 76c.

Property was also weaker, with Stride down 3c or 2.07 per cent to $1.42; Kiwi declining 2c or 2.15 per cent to 91c; and Argosy decreasing 1.5c to $1.165.

Green Cross Health was up 3c or 2.21 per cent to $1.39; Move Logistics gained 2c or 1.82 per cent to $1.12; Tower added 1.5c or 2.11 per cent to 72.5c; and NZ Rural Land Company increased 3c or 2.86 per cent to $1.08.

South Port NZ fell 24c or 3.06 per cent to $7.61; Accordant Group was down 5c or 2.91 per cent to $1.67; Embark Education declined 2c or 3.45 per cent to 56c; MHM Automation shed 2c or 2.11 per cent to 93c; and Smartpay Holdings decreased 2c or 1.89 per cent to $1.04.

The top five gainers this year on the NZX top 50 including dividends were: Spark up 25.6 per cent, a2 Milk 24.5 per cent, Chorus 19.1 per cent, Tourism Holdings 17.3 per cent, and Westpac 15 per cent.

The five biggest decliners were: Restaurant Brands, down 57.4 per cent; Ryman Healthcare 55.2 per cent, Oceania Healthcare 40.7 per cent; Arvida 39.9 per cent, and Vista Group 36.4 per cent.

Among the small cap stocks, Channel Infrastructure was the biggest mover of the year, up 52.1 per cent, MHM Automation 51.6 per cent, and Smartpay Holdings 44.4 per cent.

The biggest decliners were: TradeWindow down 75.3 per cent, NZ King Salmon Investments 67.9 per cent, Serko 67.9 per cent, NZ Automotive Investments 63.6 per cent, and Geo 63.1 per cent.